R&D Value Added: Indiana and Neighboring States vs. United States (Indexed to 2012)
CICP Innovation Metrics Analysis
1 State R&D Performance
Indiana’s research and development activity is a critical driver of innovation and advanced industry competitiveness. This section examines R&D value added, employment, and compensation using data from the Bureau of Economic Analysis R&D Satellite Account.
1.1 R&D Value Added Trends
R&D value added measures the economic contribution of research and development activities.
| geography | 2012 | 2023 | Total Growth | CAGR |
|---|---|---|---|---|
| United States | $317.6M | $701.8M | 121.0% | 7.5% |
| Indiana | $5.2M | $9.5M | 84.6% | 5.7% |
| Michigan | $12.3M | $23.1M | 86.9% | 5.9% |
| Illinois | $12.1M | $20.2M | 67.0% | 4.8% |
| Ohio | $8.3M | $12.6M | 52.7% | 3.9% |
| Kentucky | $1.3M | $1.6M | 22.3% | 1.9% |
1.2 Regional R&D Comparison
How does Indiana’s R&D intensity compare to neighboring states?
R&D Value Added by State (2023)
1.3 R&D Employment Comparison
R&D employment captures the workforce dedicated to research and development activities across the region.
R&D Employment: Indiana and Neighboring States (Indexed to 2012)
| geography | 2012 | 2023 | Total Growth | CAGR |
|---|---|---|---|---|
| United States | 2,427 | 3,243 | 33.6% | 2.7% |
| Indiana | 51 | 55 | 7.8% | 0.7% |
| Michigan | 100 | 130 | 29.4% | 2.4% |
| Illinois | 98 | 109 | 11.6% | 1.0% |
| Ohio | 81 | 89 | 9.6% | 0.8% |
| Kentucky | 17 | 14 | -15.3% | -1.5% |
1.4 R&D Compensation per Worker
Examining compensation per R&D worker reveals the economic value and competitiveness of R&D employment across states.
| State | Total Compensation | Employment | Compensation per Worker |
|---|---|---|---|
| United States | $603,763.9M | 3,243K | $186,152 |
| Illinois | $17,550.2M | 109K | $160,422 |
| Michigan | $19,933.0M | 130K | $153,923 |
| Indiana | $7,943.6M | 55K | $144,167 |
| Ohio | $10,648.3M | 89K | $119,913 |
| Kentucky | $1,445.5M | 14K | $100,382 |
R&D Compensation per Worker by State (2023)
1.5 R&D by Sector
Breaking down R&D activity by manufacturing vs. nonmanufacturing sectors reveals concentration patterns.
R&D Value Added by Sector Over Time - All States
R&D Value Added by Sector - Indiana
1.7 R&D Value Added by Detailed Industry
Breaking down R&D by specific industries reveals concentration patterns and growth dynamics within the broader manufacturing and nonmanufacturing categories.
1.7.1 Manufacturing R&D by Industry
Manufacturing R&D Value Added by Industry - Indiana and Neighboring States (2023)
| Industry | R&D Value Added | Share of Mfg R&D |
|---|---|---|
| Chemical manufacturing | $4,052.5M | 60.8% |
| Other manufacturing | $1,827.6M | 27.4% |
| Transportation equipment manufacturing | $684.5M | 10.3% |
| Computer and electronic product manufacturing | $104.2M | 1.6% |
1.7.2 Nonmanufacturing R&D by Industry
Nonmanufacturing R&D Value Added by Industry - Indiana and Neighboring States (2023)
| Industry | R&D Value Added | Share of Nonmfg R&D |
|---|---|---|
| Professional, scientific, and technical services | $1,064.5M | 66.3% |
| Information | $425.1M | 26.5% |
| Other nonmanufacturing | $116.9M | 7.3% |
1.7.3 Government and Higher Education R&D
Government and university R&D represent critical components of the regional innovation ecosystem, supporting basic research and workforce development.
Government and Higher Education R&D Value Added Over Time (Indexed to 2012)
Note: “Higher Education” includes public and private nonprofit colleges and universities. “Government” includes federal, national defense, nondefense, and state and local governments.
| State | Government R&D | Higher Education R&D |
|---|---|---|
| United States | $61,749.7M | $58,372.3M |
| Indiana | $1,013.3M | $945.3M |
| Illinois | $1,009.0M | $2,575.1M |
| Kentucky | $513.9M | $428.0M |
| Michigan | $1,889.5M | $1,815.8M |
| Ohio | $1,994.0M | $1,348.8M |
1.8 Key R&D Insights
Overall R&D Performance:
- Indiana’s R&D value added grew 84.6% from 2012 to 2023, reaching $9,545.0M
- Indiana ranks 4th among the five-state region in total R&D value added
- Indiana accounts for 1.36% of U.S. R&D value added, 1.70% of R&D employment, and 1.32% of R&D compensation
- 55,100 workers were employed in R&D activities across Indiana in 2023
Sector Composition & Dynamics:
- Manufacturing R&D dominates at 81% of Indiana’s total R&D value added, reflecting the state’s industrial heritage
- Manufacturing R&D grew 85.1% (2012-2023) while nonmanufacturing R&D grew 91.2%—the gap is slightly narrowing
- Chemical manufacturing is Indiana’s largest manufacturing R&D industry at $4,052.5M in 2023
- Compared to Ohio’s balanced R&D portfolio, Indiana’s persistent manufacturing dominance creates both competitive advantages in industrial innovation and vulnerability to sector-specific disruptions
Government & Higher Education R&D:
- Government R&D totaled $1,013.3M (74.2% growth) and higher education R&D reached $945.3M (69.3% growth) from 2012-2023
- Indiana ranks 4th among neighboring states in higher education R&D value added
- Public sector R&D — particularly university research — is critical for basic research, talent development, and technology transfer that supports private sector innovation
- States with robust university R&D ecosystems typically see stronger startup formation and technology commercialization outcomes
1.9 Data Notes
Key definitions from BEA R&D Satellite Account:
- Value Added: The contribution of R&D activities to GDP
- Employment: Full-time equivalent jobs in R&D activities
- Compensation: Total wages, salaries, and benefits for R&D workers
- Five-State Region: Indiana and its neighboring states (Michigan, Illinois, Ohio, and Kentucky)
See the full technical notes from BEA for detailed methodology.